Budget Resolutions and Economic Situation — Amendment of the Law

Part of the debate – in the House of Commons at 9:46 pm on 25th March 2013.

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Photo of Danny Alexander Danny Alexander The Chief Secretary to the Treasury 9:46 pm, 25th March 2013

I disagree with it, for reasons that I will come to. I will now make some progress.

Mr Darling made a characteristically thoughtful contribution to the debate. He has made it clear, not least through his leadership of the Better Together campaign but also in response to an intervention, that the Scottish National party is not being open about the scale of the problems that an independent Scotland would face.

It was not the presence on the Opposition Front Bench of members of the former Government that was most noticed last week. Many Members will have sensed a presence in the Chamber, and looking up they would have seen Lord Mandelson, a former member of the previous Government, looking down. Afterwards, he gave his views on the Budget. He said in a speech the following night:

“I can't quite remember which member of the government it was who claimed to have abolished boom and bust. Well, we abolished boom…The whole argument about whether we’re cutting too far and too fast, it’s in the past. It is rather predictable party political stuff from over the despatch box, and it is a bit tiring to the public.”

The shadow Chancellor would do well to take note. Lord Mandelson then said the following, which is particularly significant in the context of an earlier intervention:

“I don’t think you can really take a chance, I think the markets, whose confidence in us to pay back what we borrow—that confidence is the determining factor. If that was seriously damaged by a lurch in policy I think that would be quite a risk which I would not blame the chancellor for refusing to take.”

That is sage advice from a former member of the previous Government, which Opposition Front Benchers would do well to take.

Last week’s Budget sent a message to hard-working families in each and every constituency up and down the country: if people want to get on in life, this Government will support them. If, in the short term, people want more money back in their pockets, we are taking measures to help them. They will pay less to fill up their car; they will pay less for a pint of beer; and, most importantly, if they earn less than £10,000 they will soon pay absolutely nothing in income tax.

If, in the near future, Mr Speaker, a constituent of yours wants to own their own home, this Government are making that a very real possibility through low-deposit mortgages, through mortgage guarantees and through doubling the affordable homes guarantee programme. For those who, in the distant future, do not want their children or grandchildren to still be paying off this generation’s debts, we are taking the steps to ensure that they will not. We are reducing the structural deficit, creating a tax landscape for economic growth and building an infrastructure for the UK to compete in the global race.

This evening, I want to talk about the steps this Government have taken to build a stronger economy and a fairer society. We are putting our faith in the private sector to help us build that stronger economy. We believe that the best way to do that is to create the most competitive tax regime in the G20. Further reducing the rate of corporation tax, which we announced in this Budget, will not only send a clear message that Britain is open for business, but will increase the return on those businesses’ investments and incentivise economic growth. Meanwhile, our £2,000 employment allowance, welcomed on both sides of the House, will be a real help for small and medium-sized businesses that want to expand and to employ more staff.

The Government know that if we want to see growth we cannot, as our predecessors did so catastrophically, look to one industry or one city. Several Opposition Members mentioned the importance of manufacturing industry, but when in government Labour became over-dependent on one square mile, thanks to the shadow Chancellor’s prawn cocktail offensive. We know that for a stronger, more balanced economy, we need growth across different sectors, and we need growth up and down the country. That is why we are taking forward the measures from the Heseltine review; it is why my right hon. Friends the Business Secretary and the Deputy Prime Minister unveiled our aerospace investment in Bristol before the Budget; it is why we are supporting the asset management sector, which is so important, particularly to the Scottish economy and to Edinburgh; and it is why, as well as supporting renewables, we are developing proposals so that communities can benefit from any shale gas discovered in their area. It is right that local communities see the benefits of natural resources in their locality.

We also need to make sure that our industrial base is broad, as we have seen only too clearly the dangers of over-reliance on one specific sector. That is why my right hon. Friend the Business Secretary is overseeing £1.8 billion of funding to support strategies in 11 key sectors, working to ensure that our economy makes the most of its potential in life sciences, construction and many other areas. While we build this stronger economy, we are also making sure that we build a fairer society. The Labour party likes to portray itself as the party of taking from the rich and giving to the poor, but everyone who was paying income tax at the l0p rate and was then paying income tax at double that rate will soon, thanks to this Government, be paying no income tax at all. That policy comes straight from the Liberal Democrat manifesto to the pockets of millions of hard-working families up and down the country, thanks to this coalition Government.

Of course we recognise that, despite these actions, times are still difficult for many families up and down the country. For that reason, we have taken the decision to cancel this September’s fuel duty increase, which was baked into the public finances by the Labour party. That cancellation has been welcomed across the House, but especially by Members with more rural constituencies such as mine.

I must also congratulate my hon. Friend Greg Mulholland on his tireless and passionate campaigning on beer duty. I know that he has some wonderful pubs and a very good beer shop in his constituency, I know how many excellent breweries we have up and down the country, and I know that our scrapping of the beer duty escalator will be a real boon both for the pub trade and for the brewing industry.